November 01, 2014

Allocating Environmental Liabilities: General Principles and Practice Tips

Karen J. Nardi

This article reviews the different business transactions where environmental liabilities must be allocated, including buying, selling, and leasing real property; mergers and acquisitions; settlement agreements; and access agreements. It identifies the “menu” of liabilities that parties to a transaction should consider. It outlines some general principles that practicing lawyers should think about when drafting documents that allocate environmental liabilities. It looks at the various forms of contract language used to allocate environmental liabilities, including covenants (exculpatory and inculpatory), indemnities, releases of liability, and representations and warranties. Finally, it offers some practice tips to drafters.

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